Francois Villeroy de Galhau, Governor of the Bank of France, has suggested stronger regulatory standards for crypto businesses, which could be a blow for an industry seeking a greater footing in Europe. Villeroy said that given the recent volatility in the market, France should impose licensing requirements on Digital Asset Service Providers (DASPs) without waiting for European regulations to take effect.
Villeroy said Thursday in a speech to the financial sector in Paris that, “All the disorder in 2022 feeds a simple belief: it is desirable for France to move to an obligatory licensing of DASP as soon as possible, rather than just registration.”
Full Digital Asset Service Provider (DASP) licensing is currently optional in France, and no French companies have secured a full license. Roughly 60 organizations have secured a less extensive “registration” from the country’s Financial Markets Authority (AMF).
Current Situation of Crypto in France
Under current laws in France, companies are allowed to operate unlicensed until 2026, even if the Markets in Crypto Assets (MiCA) bill, which includes a licensing system, is passed into law. Parliament will begin discussing the amendment in January.
The MiCA bill has been under consideration by the European Union Parliament since September 2020. The bill was passed by the European Parliament Committee on Economic and Monetary Affairs on October 10, 2021.
The MiCA bill resulted from negotiations between the European Union Council, the European Commission, and the European Parliament. The final vote on the bill in plenary was rescheduled from the end of 2022 to February due to the large amount of work required by lawyer linguists to review the lengthy legal text, according to European Parliament member Stefan Berger.
Digital asset service providers which want to be granted a license are required by the AMF to comply with certain standards in terms of organization, available financial resources and business conduct, the report notes.
The governor’s proposal comes after last summer key EU institutions and member states reached an agreement on the new Markets in Crypto Assets (MiCA) legislation and achieved consensus on a set of new anti-money laundering rules for the industry.
The regulatory package is expected to enter into force in 2023 but businesses will have another 12 to 18 months to comply with it. Brussels also wants to oblige platforms processing crypto transactions for EU residents to report to tax authorities in the Union.
Binance
Crypto behemoth Binance is one of the companies which was granted the French license earlier this year, as well as Société Générale, one of France’s leading banks.
Over the past year, a series of collapses and market slides in the crypto industry has caught the attention of regulators worldwide. Following the most recent downfall of crypto exchange giant FTX, policymakers urged the need to speed up the implementation of the EU-wide Markets in Crypto-Assets (MiCA) regulation. Financial regulators responsible for drafting the implementation laws in the coming year responded that their time is already pressed.
The MiCA regulatory framework outlines comprehensive licensing rules for crypto firms. Many policy experts have said that MiCA could have mitigated the impact of the FTX collapse on Europeans, had it already been in place
